Template-Type: ReDIF-Paper 1.0
Title: Merger Performance and Managerial Incentives
Author-Name: Matthias Kräkel
Author-Email: m.kraekel@uni-bonn.de
Author-Name: Daniel Müller
Author-Email: daniel.mueller@uni-bonn.de
Classification-JEL: D82; D86; G34
Keywords: acquisition; merger; moral hazard

Abstract: We consider a two-stage principal-agent model with limited liability in which a CEO is 
employed as agent to gather information about suitable merger targets and to manage the
merged corporation in case of an acquisition. Our results show that the CEO systematically
recommends targets with low synergies—even when targets with high synergies are
available—to obtain high-powered incentives and, hence, a high personal income at the
merger-management stage.

Note: 
Length: 37
Creation-Date: 2014-11
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse02_2014.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse02_2014